Ninja Notes: Leases; Curr. Assets and Liabilities; NFP Accounting; Pensions Flashcards
What are the criteria for Risk of Ownership to pass for a Capital Lease?
> Title
Bargain Purchase Option (BPO)
Substance
- 75% Test: Lease term is = or > 75% of useful life
- 90% Test: PV of Min. Lease Pmts. = or > 90% of Fair value.
What is the discount rate for Capital Leases for the Lessee?
The lesser or the Implicit Rate in the lease or the Market Rate.
Extra requirements Lessor must meet for Capital Lease?
> Collectibility of lease pmts. is predictable.
> No uncertainties about the lessor reimbursing the lessee for costs incurred.
How are Leasehold improvements handled under an Operating Lease?
Capitalized and depreciated over the lesser of the Lease Life or Leasehold improvements life.
What if pmts. fluctuate over the term of a lease (Operating)?
Rent revenue is recognized on a S/L basis.
For a Sales leaseback how is profit on the sale handled?
Any profit on the sale is deferred and amortized, with some exceptions.
For a Sales Leaseback, what if the PV of Lease pmts. is 10% or less of the asset’s FMV?
The gain is recognized.
For a Sales Leaseback, what if the PV of Lease pmts. is greater than 10% or the FMV and the lease is operating?
Gain is recognized except the amount of the PV of the lease pmts.
How should Remote, Reasonably possible, and Probable contingencies all be shown?
> Remote: Don’t accrue or disclose
Reasonably Possible: Disclose
Probable: Accrue (if estimable) and Disclose.
When do Criteria 3 & 4 for transfer of Ownership not apply in determining a Capital Lease?
Criteria 3 and 4 do not apply when the lease term falls within the last 25% of the economic life, if the leased asset is land, or if the leased asset involves both land and a building.
Which financial statements are required for NFP accounting?
> Stmt. of Financial Position
> Stmt. of Activities
> Stmt. of Cash Flows
What F/S is required specifically for Voluntary Health and Welfare Organizations and how is it organized?
Stmt. of Functional Expenses; shows expenses by function and by natural classification.
How is the NFP’s Stmt. of Financial Position organized?
Assets Liabs. Net Assets - Unrestricted - Perm. Restricted - Temp. Restricted.
How is the NFP’s Stmt. of Activites organzied?
Revenues Expenses - Only deducted from Unrestricted Revs. Gains and Losses Changes in Net Asset Classes - Unrestricted - Perm. Restricted - Temp. Restricted
What are the F/S for non-governmental hospitals?
> Balance Sheet > Stmt. of Operations > Stmt. of Changes in Net Assets > Stmt. of Cash Flows > F/S Notes
When are revenues on contributions recorded and how are they recorded?
They are recorded in the year received, not the year the contribution is spent, and are recorded at Fair Value on the Date Received.
When are services contributions?
If the org. would have otherwise paid for or they increase the value of a non-monetary asset.
Is hospital charity care revenue?
No.
Of the three types of assets, which are expenses deducted from?
Unrestricted only.
How should multi-year contributions be recorded?
At the present value of the future contributions.
Art Collections recognition
Not recognized as assets or contributions if held for display or education–or their sale results in the purchase of similar items.
How are investments for NFP accounting valued and what is the exception?
Fair value; exception, equity method used when significant influence exists.
How are Scholarships handled?
They are a reduction of revenue & Netted against college’s expense?
How is depreciation expense handled under NFP accounting?
It is allocated proportionately to various functions.
What is the Pension Expense calculation?
Service Costs \+ Interest - Actual Return on Plan Assets \+ Unexpected Loss (Gains) \+ Amort. of Prior Service Cost
How is Interest for the Pension Expense determined?
It is the Beg. PBO x Interest Rate
It is an incr. in the PBO due to time.
How is the Actual Return on Plan Assets determined?
It is the Ending value minus the Beg. Value net of contributions.
Where do Gains and Losses go to for Pension expense?
They go to OCI, net of tax
What are some F/S disclosure for Pensions?
> Pension funding policies
Types of assets held
5-year benefits to be paid
5-year benefits in aggregate thereafter
Est. Pension contribution for next period
When are Vested Benefits owned to employees?
Owned to employees regardless of continuance of employment via the Full Eligibility Date.
